The REAL Silver High

By Silver Shield, on April 15th, 2011

There is much ballyhoo about recent rise in silver’s Nominal price, but the REAL high is far, far away. Silver is closing in on the Silver Thursday high of $48.70 set in 1980. The REAL high is still miles away, so don’t start worrying about reaching the top.

We all know that $48.70 in 2011 does not buy you anywhere near what it did in 1980. If we factor that record 1980 price in silver using the governments rigged inflation numbers, that would mean that the REAL inflation adjusted high of silver is $132.07. This means that we are still 68% below the REAL high in silver. If we use that same inflation calculator for gold, we would see that the REAL high for gold, is $2,305. This means we are still 38% below that record. (Notice how that all things being equal, you still have a much better opportunity investing in silver than you do in gold.)

I believe that the real, REAL high is actually much, much higher for many reasons.First, the government is lying to you about about the real rate of inflation. A recent article on CNBS shows how the government is lying to you, even today, about the real rate of inflation. They do this so they can steal from you, plain and simple. Every dollar they print is a direct tax on your wages and savings. They need to keep your expectations low so you go not panic while they are gutting you. The government hides this inflation of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments, substitution, weighting and subtraction. This allows the government to post benign inflation of 2.4% when the real rate is over 10%. So if the REAL rate of inflation is 4x higher than the official CPI number of silver and gold, that would put the REAL high of silver at $528 and gold $9,220.

This number is much more realistic because the money supply in the United States has been vastly increased since 1980. Using the broad money component of M2, there is approximately 10 times as much money in the economy. So silver at $48 in 1980 times 10x more dollars in circulation is $487 for silver and $8,500 for gold. With that in mind, we are miles away from hitting any real record in silver or gold.

That is just one factor in the price of silver. When you realize that there is a lot less silver in the world since 1980, $500 silver is too low. When you realize that there are 50% more people in the world since 1980, $500 silver is too low. When you realize that only about 15% of the world’s population participated in the bull run of the 70’s, $500 silver is too low. When you realize that there are a lot more Euros, Yen, Yuan, and other currencies in the world since 1980, $500 silver is too low. When you realize that there is going to world wide collapse of all fiat currencies and all paper assets like stocks, bonds, and real estate… silver is priceless.

“Stay away from silver miners (they will be confiscated, even American and Canadian miners), stay away form the ETFs (they are a paper fraud), stay away from unallocated silver accounts, stay away from numismatic silver, only buy the physical bullion in your possession.”

How far is it safe to own “allocated silver” through such companies as BullionVault? Is it a fraud as well? Or worth the risk?
Thanks,

one more thing…what if FED guys manage for a while to convince markets that QE is dead? If stock markets start to plunge on the news, say in june, won’t investors be forced to sell their gold and silver to cover their losses, not to mention the currency trading?
Is there not a short term risk of big correction on silver, i.e around -25% down to 30$?
It’s hard for me to buy more at this point, because of these questions.
Thanks for your advice,

I am going to take on this issue in a coming article about the head fake of QE.
If properly positioned the Elite can benefit off of inflation or deflation.
After the Civil War the Elite shrank the money supply by 80% and squeezed the crap out of debtors.
I put the chance of them doing this very little.
If the bankers do not create more debt every year in excess of the debt and interest that was accrued the year before the whole system will collapse.

Even in this environment Silver would STILL be the place to be.
Say silver did get whacked 25% I believe the REAL return of silver would actually gain in purchasing power.
If this scenario happened ALL paper assets would get crushed 50% to 95%, stocks, bonds, real estate…

your silver will buy much, much more stocks, bonds, real estate.

Their banking institutions are leveraged so much that it will fall apart over night.
And because this is truly a global system this will reverberate through out the world over the weekend.
This would allow for political uncertainty that might take away the power from the banks.

If they keep inflating, they keep the their power structure and keep the game going.

There will be QE3, 4, 5, 6…

The REAL silver high is so far away that even in a bad environment silver’s fundamentals will power through the fiat store.

Besides thanking you for your reactivity to answer, really thanks a lot for all this site and content!
People like you and this kind of site are a blessing for people of middle class like me who weren’t so aware of what’s happening and hear media talk about bubble all the time.
As I wrote before, I’m still a bit uncomfortable to buy more at these levels though, as I read a lot about possible “end QE” communication and consequences on all classes of assets, including gold and silver. Blythe and her friends would be so happy with it.
Not that I’d expect a crach like in 2008 (-60% but then, there was no cash, whereas now, there is too much of it :)), but something like -30% might happen if we have a big stock market correction further to “end QE” announcement (though we know it would be a fraud).

I also wonder what happens to one who owns silver contracts such as CFD if the Crimex defaults (closing door on silver article)? You mean the value of the contracts would be suspended? Renegociated? CFDs would stop tracing the value of silver spot and owners of CFDs would take some losses?

Thanks a lot for your answers, and sorry about my english, I’m french but doing the bes I can to communicate

Fiat (paper) can be printed and has a proven tract record of only surviving for short period of time. (In the overall picture of time.) It comes and goes, violently.

PM’s take real human labor, sweat off ones back. An honest days work, for an honest days pay…In the old days it was with pick, shovel, crude tools, etc. Today, it is done on a larger scale with huge equipment. God gave man a brain to think, develop, forge, manufacture, etc. this amazing equipment whether one wants to admit it or not. The same equipment is be used to restore the land.

Granted, fiat is made with equipment and the art work is impressive. But, it can be cranked out at an incredible rate. Each dollar printed worth less than the previous. Presses are in the same building, running day after day. A heartless, meaningless process. A product of convienence.

PM’s, a treasure hunt that has consumed many a man’s life…good, bad but a choice none the less…A thought process, a search through natures catacombs, a journey for something hidden in a stream, cave or rock on the landscape.

I can not find the quote, but on this week’s Goldseek radio broadcast with the host and a representative from G.A.T.A., David Morgan, of silver-investor.com, was quoted as stating that there will be no major retraction in the price of silver on it rise to $90!!!

I have always found David’s market assessments and price predictions over the decade to be over conservative. Perhaps this is a necessary position to protect one’s credibility when you are a professional consultant to major investment interests. Nevertheless, if David is now stating this seemingly extreme position… LOOK OUT BELOW!!!!

Once more, I am totally confident that on the long run (one to two years), silver and gold will keep outperforming the rest of the market, especially cash.

I simply mention that I’d be interested in focusing on the possibility of a strong short-term correction which may occur within next few weeks/months, due to “QE stops for a while”
After all, it’s great to buy silver at 40$. But it’s even better to buy it at 30$ if we are headed that way this summer. But it would be a pity to wait for a correction that will never occur, and see silver reach 50 $ with my big open mouth
I’m just trying to make the most of my cash to buy as much silver and gold as possible.
Here are two link I found from Chris Martenson, who develops the same idea about the impact of an “end QE”. Always worth reading 😉

Still Chris is pretty confident that one should buy (me I’m pretty much considering whether or not to reinforce a pretty strong long position already).
As he points out :

” So holding precious metals for purchasing power preservation should be a fundamental part of your plans. And while there is real risk of a short-term deflationary downdraft in commodities as the Fed jawbones about ending quantitative easing, my general advice is anything that you expect to buy over the next year you should just buy now. What the heck, you’ll use it anyways, and you just might buy it for a lot cheaper than later on.”

There will be no QE4, 5, 6… . For somewhere in the initial stages of QE3, the baker who has accepted the wheelbarrow placed outside his establishment, piled high with tightly bound currency for his loaf, will empty the contents into the gutter and place the cartage vehicle behind his shop!

hmm…I’d like to know what you think about it.
Because if FED makes a surprise rate raise to maintain dollar index above its lowest support to avoid a waterfall drop, and indeed stop QE as is mentionned here and there…that might be a serious blow for our commodities bull market, or am I wrong?
Of course, “the enemy” wants to keep us guessing.
But I can’t help doubting, with QE2 coming to an end and dollar index reaching its lows. What will be their next move? If dollar and rates go up again, will Silver keep going higher anyway on the long run?

The dollar index is slowly dropping. Why? because people in countries worldwide are losing faith in the continuous printing. The Chinese said it best,” Please do not devalue our investment in your country.” Silver has continued to rise thru out this…A new high…a slight dip…A new high…etc. People in my community are buying Ag at an INSANE rate. These folks are just everyday average Americans…They seeing the deception transpiring…Some that have been buying for years are selling for the shitty fiat…Why you ask? To purchase ammo, guns, food, water filters, seeds, buckets of wheat, canning supplies, generators…That silver is gobbled up by me and others. it is awesome to walk in with worthless fiat and walk out 20 minutes later with 10,20 or 100 ozs. It never leaves our community. Safe for the elite. If a big dip happens, we’ll continue the insanity and keep buying.

Who knows how long they will keep the game going…They think that it is only a mateter of time before they wear us out…THEY WANT THE SILVER!!!

Believe in your heart that you must buy silver, reject fiat. I believe it is our only option.

Courtesy of Google Translate:
For Magadates
Having read your questions in which you say you speak French I am taking the liberty of écrire.J ‘ve been all my life professional portfolio manager in Geneva and I am always interested in the precious metals have no confidence in the drifts government especially since the introduction of the Euro. Having also experienced the great speculation in the silver metal Hunt brothers of Texas there about 20 years, I can tell you that the Comex Chicago whose board consists of representatives the great houses of amenities, which were then silver metal shorts decided one day to another dizzying increase margins on contracts thus breaking up and putting Hunt difficulté.Je still think that the excesses current as American and European central banks will create a state of defiance such as metals purchases will accelerate. Have you seen that India Wholesale Buyer
traditional gold began to flock money? A person following this very closely in these markets and I can advise you as a source of information and ideas is one of your compatrotes French: Pierre Leconte, manager of precious metals fund and portfolio manager of a house and Luxembourg Fuchs associés.Vous find its parameters on Google.Espérant you have been of some use Sincerely JACramer

Thanks Mr Cramer
So everyone here bets on a rally towards 50$ straight?
Anyway, it’s totally out of question that I sell a single ounce of my silver or gold indeed.
As you do, I’m enjoying the ride with what I already accumulated.
The only question I was having was indeed a tactical one : should I keep a few bullets and dry powder to use waiting silver to correct a bit down to the 35$ level, or should I fire all my ammo right away.

Dam what a good web sight you have here. I totally agree with your price projections. But all your laws of supply an demand are based on a capitalist structure. That games done gone. Every move the gov makes now is anticapitalistic. It could be tommorrow an the comex could say no more buy orders only sell orders just like in the end of the hunt days. No matter what we will all lose at the end.

When the dollar goes to zero, silver goes to infinity. It’ll be “worth” however much you can buy with, say, 1 oz. at the local Farmers’ Market: maybe 2 or 3 days of food and supplies. Of course that flinty-eyed farmer is going to be wearing a 9 mm.; so if you want the best deal, you had better be wearing one too.

I am counting on the collapse of the dollar! $14 T and climbing is unsustainable by any government or society, we know it, they know it, the blind are the only ones that say silver and gold are in a bubble because they don’t want to beleive it or see it. PM’s are the ultimate choice of people who want economic freedom. Keep on buying the dips, the gains just keep on buying! By the way, I’ll have my 9mm straped to my hip as well. The libs will be the ones saying, “Its not fair, you have all the food, silver and guns!”

Your money supply chart seems questionable. Every chart I have seen has shown money supply at flat to going down since 2008. This would put your whole analysis into question. With Tea Party spending cuts coming it even furthers the questionable increases. Commodity prices are in a bubble….and a massive Dollar rally is around the corner when the Fed stops QE2 in June.

Tea Party Spending cuts! LOL they are bought and paid for just like the Republicans and Democrats. I hope you are not one of these poor guys trying to trade this silver socket. Ask Bob Moriarty how that worked for him when he shorted silver at $38. There is something much, much bigger going on here and the reversion to the mean will throw silver through $132. When the dollar collapses…

Good point Silver Shield. Catching a falling knife is dangerous regardless of the fundamentals – I am a technical trader not a fundamental trader. I have read on another blog that the true cost of Gold relative to the CPI would put it about 850 dollars per oz. But the last time we had a bubble it got to 3 to 4 times this value. This puts Gold up to potentially $2400 oz. But like silver in the 80s it came crashing down. This market will do the same at some point. Perhaps from $132. Shorting is unwise….but it is a bubble, mean reversion is like gravity it will happen, the only problem is from what level as the negative money supply growth does not support the move fundamentally. Longs better have their stops in.

Dang…….. manufacturers will continue to produce what the People need and it is the banksters who are going to lose. People, once they understand, will create their own markets; black markets if you will, if necessary and carry on commerce for whatever commodities suppliers are willing to trade for….if you don’t have silver maybe you will pay the electrician with cigarettes, whiskey or food…..life will go on..

CabotAR……Completely mistaken/false belief. Silver is far more rare then gold and has literally thousands of industrial/medical applications. It is the only duel metal; i.e. it is both an industrial metal in high demand and it is real money. All the gold that has ever been produced still exists while 95% of all silver produced has been used and used up; it is gone. The U.S. Geological Survey has stated silver will be the first major metal to disappear from the earth possibly as early as 2020. Gold is plentiful and used to settle national debt, make jewelry and produce art but silver is extremely more rare and will almost certainly supplant gold in the future. Furthermore, silver prices have been so dramatically suppressed, silver will continue to “outperform” gold; i.e. you invest the same amount of fiat currency in silver and gold but silver’s price will essentially quintuple every time gold’s price merely doubles. Think about it. Gold and silver are not at all the same.

Blue…comment #1 The expansion of the monetary base by disasterous multiple trillions is beyond question. This is why Treasury stopped reporting M3 back in 2006. They want to hide the facts from the public, some of whom want desperately to deny what is happening. The “Tea Party” cuts are laughable and come from entirely the wrong direction; i.e. it is not social security bankrupting the country, it is the funding of multiple, perpetual, illegal wars of aggression, mass murder and theft that benefit only the warmongering banksters/transnationals/military that is bankrupting the country as they also control the private bank we call the Federal Reserve. Gold and silver prices are not in a bubble; show zero characteristics of a bubble and obviously represent captial flight to safe havens. If there is an artificial/temporary rally for the dollar it will be short lived at best. Regardless of the ingnorance expressed in this post, there is nothing to support a dollar rally of any duration or significance. There are still $1.144 quadrillion ‘dollars’ in fraudulent over-the-counter credit derivatives as yet unexposed in the international market place: according to the Bank of International Settlements, 95% of those derivatives were bought on margin; borrowed money. It only took a couple of trillion to drop the U.S. economy…….there isn’t enough money on the planet to cover these debts. The dollar is ‘dead man walking’ and the destruction of it and then world fiat currency system was deliberately designed to occur in order to facilitate the banksters goals. NO economic collapse EVER happens by accident…..it must be engineered and that is what we are dealing with today…..get your silver while you can

Blue…comment #2 This person is either terribly ignorant and an awful “trader” or a mole working for the Boyz; someone who visits sites like this and is attempting to scare the public away from buying precious metals and/or trying to persuade them to sell real money for fake. Either way I think “Blue” needs to be ignored…….]

@Billie-I agree with your sentiment entirely.Though you have spelled it out much more eloquently than I.
I also doubted the authenticity of “Blue” as soon as I read the comment!
@Silver Shield-thank you so much for your hard work in this area.I have watched the SOL video series.I can’t wait for it to be put on a larger world stage,the silver shield(Drudge Report).I truly believe this will have a serious impact on many people.You just can’t read the info and NOT learn something!Very well written and very much appreciated:)I hope the small donation I made helps a bit?I really wish I could have done more,but you are definately NOT alone,Patriot!!

Sic semper tyrannis maybe should be translated sic semper fiat: such is the way of tyrants and fiat. As Ralph Cramden would say: Bang, Zoom, to da moon, Alice. The end of the dollar is within sight, as is the coming global crash. Keep on stacking.

Well, anyone who thinks the dollar is going to rally in June when the QE well has dried up should look to the 10 year chart for the dollar. The dollar has been in a downtrend even before QE began…so why would stopping QE reverse the downtrend of the last 10 years? Seems like if anything it would just be a slower decline of the purchasing power of the dollar, not an increase in the demand/purchasing power of the USD. As well, one must consider that the PM’s are rising against every single currency in existence, not just the USD – demand outside of the U.S. will continue despite a halt in QE. All it will take is a few more companies and derivitaves to be defaulted upon in order for the Fed to “take action” and announce QE 3. Overall, the fundamentals do not dictate a higher U.S. dollar in the near or intermediate term, even if QE is halted in June. Maybe people think that the U.S. dollar will rally based upon the notion that what the Mass Media says is true…in that case – GOD BLESS AMERICA!!!

From Jim Butler (www.butlerresearch.com) and Miles Franklin (free) e-newsletter:(this is the most ‘bullish’thing I’ve read,on where silver prices will likely go,in the future:)

“So here’s my takeaway –total world silver inventories appear no greater than the one billion ounce level I had long guesstimated and may,in fact,be significantly less. That’s one billion ounces (or less) in a world with almost 7 billion souls. I’ll do the math for you –there is less than 0.15% of one ounce per capita. In dollars,that comes to about $5 worth of silver per capita. Just for comparison purposes,the per capita dollar value of gold bullion (3 billion ounces) comes to $650 per head,or 130 times more than silver. If that doesn’t auger well for silver outperforming gold in the future,I don’t [know] what does.

Pay attention to the daily changes in recorded silver inventories,but not to the point of losing track of the big picture. The big picture shows there is an incredibly small amount of silver in the world,much less than just about anyone realizes.”(If necessary,read those figures again)

bullion-vault is not bad but the ROTHCHILD SCUM have now bought into their company a 10% stake, after that i got my cash out. the rothchilds i have no doubt will use this comapny and the way it sells silver to set up a new gold digital world currency. it will be regulated and the gov of the worlds will know all about what you have in gold and silver. what i will say though is for liquidity aka if you wanted to have money in gold off shore it is a good alternative and it is very liquid. It is good if your one of those people who like to trade the silver and gold ratio as you can swop them over in a few minutes. Goldmoney is beter for savings and will let you send the gold converted back into cash anywhere in the world, but they depend on the days spot(fix). so a few bob in one of these companies is ok in-case you had some trouble and needed to sell your gold quick , but the massive bulk is beter in physical, in your own possession, when the SHTF no government can be trusted not to stop all and any cash flows(capital controls)leaving their country.

[…] Posted by admin on Apr 16th, 2011 and filed under Economy. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry There is much ballyhoo about recent rise in silver’s Nominal price, but the REAL high is far, far away. Silver is closing in on the Silver Thursday high of $48.70 set in 1980. The REAL high is still miles away, so don’t start worrying about reaching the top. We all know that $48.70 in 2011 does not buy you anywhere near what it did in 1980. If we factor that record 1980 price in silver using the governments rigged inflation numbers, that would mean that the REAL inflation adjusted high of silver is $132.07. This means that we are still 68% below the REAL high in silver. If we use that same inflation calculator for gold, we would see that the REAL high for gold, is $2,305. This means we are still 38% below that record. (Notice how that all things being equal, you still have a much better opportunity investing in silver than you do in gold.) More Here.. […]

[…] silver is still 66% below its CPI inflation adjusted high and only about $450 away from it’s REAL silver high. That is just to get back to the Hunt era high in 1980. There is vastly less silver in the world […]

[…] the silver is still 66% below its CPI inflation adjusted high and only about $450 away from it’s REAL silver high. That is just to get back to the Hunt era high in 1980. There is vastly less silver in the world […]

[…] to start. I have said that the $50 silver “all time high” is nothing and that the REAL silver high is probably closer to $500 an ounce once you adjust for REAL inflation. I do not believe in trading […]

[…] how we can fight back the corrupt welfare/warfare state and create generational wealth by buying REAL physical silver. The article was read by 100,000 people on my blog. When the article was released silver was at […]

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